WSP Global Inc. (TSX: WSP) (“WSP” or the “Corporation”) today
announced financial and operating results for the fiscal year and
fourth quarter ended on December 31, 2020.
WSP is very pleased with its performance
throughout 2020, delivering on its ambitions with an improved
adjusted EBITDA margin and record cash flows. WSP completed the
year in a robust financial position with a healthy backlog,
providing a solid platform for continued success in 2021.
FOURTH QUARTER 2020 FINANCIAL
HIGHLIGHTS
- Revenues and net
revenues* for the quarter reached $2.2 billion and $1.7 billion, up
1.8% and down 4.1%, respectively, compared to Q4 2019. Organically,
net revenues contracted 5.9% for the quarter. The increase in the
Americas, stemming from organic growth and acquisition growth, was
offset by organic contraction in the other reportable
segments.
- Adjusted
EBITDA* in the quarter of $262.1 million, down $4.2 million or
1.6%, compared to $266.3 million in Q4 2019. Adjusted EBITDA
margin* for the quarter reached 15.5%, compared to 15.1% in Q4
2019. The increase in margin is attributable to the Americas, APAC
and Canada reportable segments, partially offset by lower margins
in EMEIA.
- Earnings
before net financing expense and income taxes in the quarter of
$105.3 million, up $22.6 million, or 27.3%, compared to Q4 2019,
mainly due to write-off of leasehold capital assets following
office renovation recorded in 2019, partially offset by severance
costs in 2020 recorded in acquisition, integration and
restructuring costs.
- Net
earnings attributable to shareholders for the quarter of $68.9
million, or $0.61 per share, up 70.1% and 60.5%, respectively, when
compared to Q4 2019. The increase is mainly attributable to higher
earnings before net financing expense and income taxes, as well as
lower net financing expense.
- Adjusted
net earnings* for the quarter of $81.1 million, or $0.71 per share,
up $25.8 million and $0.19, respectively, compared to Q4 2019. The
increase in these metrics are mainly attributable to write-off of
leasehold capital assets following office renovation recorded in
2019.
-
Quarterly dividend declared of $0.375 per share, with a 54.1%
Dividend Reinvestment Plan (“DRIP”) participation.
- In December 2020, WSP entered into
an arrangement agreement (the “Arrangement Agreement”) providing
for the acquisition of all the issued and outstanding shares of
Enterra Holdings Ltd., the holding company of Golder Associates
(“Golder”). Under the terms of the Arrangement Agreement, WSP will
acquire Golder for an aggregate cash consideration of US$1.14
billion (approximately $1.5 billion). In January 2021, the approval
of the shareholders of Golder was obtained and the Golder
Acquisition is expected to be completed in the first half of the
second quarter of 2021.
FISCAL YEAR 2020 FINANCIAL
HIGHLIGHTS
- Revenues
and net revenues* for the year reached $8.8 billion and $6.9
billion, down 1.3% and 0.4%, respectively, compared to 2019.
Organically, net revenues contracted 3.6% for the year, in line
with Management's expectations. The organic growth in APAC and
acquisition growth across segments were offset by organic
contraction in Canada, EMEIA and the Americas.
- Backlog*
as at December 31, 2020 stood at $8.4 billion, representing
11.5 months of revenues, up $289.5 million or 3.6% from $8.1
billion as at December 31, 2019, including an organic growth
of 2.4%.
- Earnings
before net financing expense and income taxes in 2020 of $459.4
million, down $28.4 million, or 5.8%, compared to 2019, mainly
due to higher acquisition, integration and restructuring
costs.
- Adjusted
EBITDA* in the year of $1,053.7 million, up $16.9 million or 1.6%,
compared to $1,036.8 million in 2019. Adjusted EBITDA slightly
surpassed Management's expectation.
- Adjusted EBITDA margin* for 2020
increased to 15.4%, compared to 15.1% in 2019. The increase is
largely due to a continued focus on margin improvement including
lower costs mainly stemming from cost-containment measures, office
lock-downs and travel restrictions during the COVID-19
pandemic.
- Net
earnings attributable to shareholders of $276.0 million in 2020, or
$2.51 per share, down $10.5 million and $0.21, respectively,
compared to 2019. The decrease was mainly due to higher
acquisition, integration and restructuring costs, partially offset
by lower net financing expense.
- Adjusted
net earnings* for 2020 of $338.9 million, or $3.08 per share, up
$32.5 million compared to 2019. The increase in these metrics is
mainly attributable to lower net financing expense.
- DSO* as
at December 31, 2020 reached a record low of 63 days, compared
to 74 days as at December 31, 2019. This level of DSO came in
well below Management's outlook range of 73 to 78 days.
- Cash
inflows from operating activities of $1,125.1 million in the year
ended December 31, 2020, compared to $814.3 million in
the comparable period in 2019.
- Free
cash flow* of $735.3 million, representing 266% of net
earnings attributable to shareholders.
- The net
debt to adjusted EBITDA ratio* stood at 0.1x. The ratio is
significantly lower than 1.1x as at December 31, 2019 due
mainly to the repayment of a portion of indebtedness under credit
facilities following strong free cash flow in 2020 and the equity
financing completed in the second quarter of 2020.
- Full
year dividends declared of $1.50 per share, or $167.2 million, with
cash payout of $84.9 million or 50.8%.
“Despite the unprecedented challenges we faced
in 2020, we illustrated the agility of our platform and the
strength of our foundation, while delivering on many of our
2019-2021 strategic ambitions,” commented Alexandre L'Heureux,
WSP's President and Chief Executive Officer. “Thanks to the
tremendous contribution of our teams, we also delivered on the
financial objectives we set at the beginning of the global health
crisis, which were to maintain our margins and to safeguard our
financial position. We are focused on sustaining our momentum and
look forward to joining forces with Golder to become the global
leading earth sciences and environmental consulting firm. As we
enter 2021, we will continue to embrace change and strive to expand
possibilities,” he added.
OUTLOOK FOR 2021
This outlook is provided as at February 24,
2021, to assist analysts and shareholders in formalizing their
respective views on the year ending December 31, 2021. The reader
is cautioned that using this information for other purposes may be
inappropriate. This information constitutes forward-looking
information, based on multiple estimates and assumptions about
future events. Actual results will differ, and such differences may
be material. Please refer to section 19, "Forward-looking
statements", of the Corporation's MD&A for the year ended
December 31, 2020 for the full disclaimer.
Management expects the Corporation's results for
the year ending December 31, 2021 will fall within the following
ranges:
|
2021 TARGET RANGE(1) |
Net
revenues* |
Between $7.5 billion and $8.0 billion |
Adjusted
EBITDA* |
Between $1.22 billion and $1.29 billion |
Seasonality and adjusted
EBITDA* fluctuations |
Between 18.0% and 29.0%, Q1 being the lowest and Q3 being the
highest |
DSO* |
73 to 77 days |
Net capital
expenditures** |
Between $150 million and $170 million |
Acquisition, integration
and restructuring costs |
Between $55 million and $65 million |
Underlying AssumptionsThe
Corporation cautions that the assumptions used to prepare the 2021
outlook could be incorrect or inaccurate. Accordingly, the
Corporation’s actual results could differ materially from the
Corporation’s expectations as set out in this press release.
The target ranges presented in the preceding
table include the effect of the Golder acquisition assuming it
closes in the first half of the second quarter of 2021. The Golder
acquisition remains subject to closing conditions, including the
receipt of regulatory approvals. Until such conditions are met,
there can be no assurance that the Golder acquisition will be
consummated. Also, the target ranges were prepared assuming no
fluctuations in foreign exchange rates in markets in which the
Corporation operates. The Corporation did not consider any
dispositions, mergers, business combinations and other transactions
that may occur after the publication of this press release except
for the Golder acquisition. In the 2021 target ranges, the
Corporation considered numerous economic and market assumptions
regarding the competition, political environment and economic
performance of each region where it operates.
The forecasts were prepared using tax rates
enacted as of December 31, 2020, in the countries in which the
Corporation currently operates. The Corporation anticipates the
effective tax rate in 2021 will range between 26% to 30%.
The Corporation manages it capital structure to
achieve a net debt to adjusted EBITDA ratio between 1.0 and
2.0.
The Corporation generated exceptionally strong
free cash flow in 2020 resulting from, among other things,
record-low DSO. Although the Corporation will maintain the same
focus on cash management, it is anticipated that for 2021, DSO will
return to a normal level.
For 2021, the Corporation anticipates
consolidated organic growth in net revenues, spanning across all
reportable segments, on a constant currency basis, in the range of
2% to 5%. The Corporation expects a different seasonality pattern
in 2021 given the gradual ramp up of its workforce to respond to
the demand in 2021, which is expected to gain momentum in the
second half of the year. Accordingly, the Corporation anticipates
low-to-mid single digit organic contraction in net revenues for the
first quarter and sequential increases quarter over quarter for the
rest of the year. Head office corporate costs for 2021 are expected
to range between $90 million and $100 million.
CanadaThe Corporation
anticipates mid-single-digit organic growth in net revenues by
segment for its Canadian operations.
Americas (United States and Latin
America)The Corporation anticipates growth in net revenues
for the US and Latin America operations in the mid-single-digit
level, driven mainly by the US operations.
EMEIA (Europe, Middle East, India and
Africa)The EMEIA reportable segment is anticipated to
deliver low to mid-single-digit organic growth in net revenues by
segment in 2021.
APAC (Asia Pacific)The
Corporation anticipates low to mid-single-digit organic growth in
net revenues for the APAC reportable segment.
DIVIDENDThe Board of WSP
declared a dividend of $0.375 per share. This dividend will be
payable on or about April 15, 2021, to shareholders of record at
the close of business on March 31, 2021.
FINANCIAL REPORTThis release
includes, by reference, the 2020 financial reports, including the
consolidated financial statements and the Management’s Discussion
& Analysis (“MD&A”) of the Corporation.
For a copy of our 2020 financial results,
including the MD&A and the audited consolidated financial
statements, please visit our website at www.wsp.com.
CONFERENCE CALL WSP will hold a
conference call and webcast at 8 a.m. (Eastern Time) on February
25, 2021 to discuss these results.To participate in the conference
call, dial 1-647-427-2309 or 1-866-521-4907 (toll free). A live
webcast of the conference call will also be available at
www.wsp.com/investors.
A presentation of the 2020 fourth quarter and
fiscal highlights and results will be accessible on February 24,
2021 after market close under the “Investors” section of the WSP
website. For those unable to attend, a replay will be available
within 24 hours following the call.
* Non-IFRS measures. These measures are defined
in section 22, “Glossary of non-IFRS measures and segment reporting
measures” of the Corporation's Management's Discussion &
Analysis for the year ended December 31, 2020. Please refer to
"Non-IFRS measures" disclaimer below.
** Capital expenditures pertaining to property
and equipment and intangible assets, net of proceeds from disposal
and lease incentives received
(1) This information constitutes forward-looking information,
based on multiple estimates and assumptions about future events.
The reader is cautioned that using this information for other
purposes may be inappropriate. Actual results will differ and such
differences may be material. Please refer to "Forward-looking
statements" disclaimer below.
RESULTS OF OPERATIONS
|
Fourth quarters ended |
Years ended |
(in
millions of dollars, except number of shares and per share
data) |
December 31, 2020 |
December 31, 2019 |
December 31, 2020 |
December 31, 2019 |
Revenues |
$ |
2,248.3 |
$ |
2,209.3 |
$ |
8,803.9 |
$ |
8,916.1 |
|
Less:
Subconsultants and direct costs |
$ |
560.0 |
$ |
448.6 |
$ |
1,944.8 |
$ |
2,029.8 |
|
Net revenues* |
$ |
1,688.3 |
$ |
1,760.7 |
$ |
6,859.1 |
$ |
6,886.3 |
|
Earnings before net financing expense and income
taxes |
$ |
105.3 |
$ |
82.7 |
$ |
459.4 |
$ |
487.8 |
|
Net
financing expense |
$ |
1.9 |
$ |
28.4 |
$ |
73.5 |
$ |
102.0 |
|
Earnings before income taxes |
$ |
103.4 |
$ |
54.3 |
$ |
385.9 |
$ |
385.8 |
|
Income
tax expense |
$ |
33.4 |
$ |
13.5 |
$ |
108.5 |
$ |
100.1 |
|
Net earnings |
$ |
70.0 |
$ |
40.8 |
$ |
277.4 |
$ |
285.7 |
|
Net earnings attributable to: |
|
|
|
|
Shareholders of WSP Global Inc. |
$ |
68.9 |
$ |
40.5 |
$ |
276.0 |
$ |
286.5 |
|
Non-controlling interests |
$ |
1.1 |
$ |
0.3 |
$ |
1.4 |
$ |
(0.8 |
) |
Basic net earnings per share |
$ |
0.61 |
$ |
0.38 |
$ |
2.51 |
$ |
2.72 |
|
Diluted net earnings per share |
$ |
0.61 |
$ |
0.38 |
$ |
2.50 |
$ |
2.71 |
|
Basic weighted average number of shares |
|
113,472,584 |
|
105,885,503 |
|
110,020,798 |
|
105,235,267 |
|
Diluted
weighted average number of shares |
|
113,751,792 |
|
106,076,127 |
|
110,263,100 |
|
105,613,623 |
|
*Non-IFRS measure. This measure is defined in section 22,
“Glossary of non-IFRS measures and segment reporting measures” of
the Corporation's Management's Discussion & Analysis for the
year ended December 31, 2020.
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITIONReferences to notes refer to notes in the
financial statements
As at December 31 |
December 31, 2020 |
|
December 31, 2019 |
|
|
$ |
|
$ |
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents (note 28) |
437.1 |
|
255.6 |
|
Trade receivables and other receivables (note 14) |
1,598.8 |
|
1,767.8 |
|
Cost and anticipated profits in excess of billings (note 15) |
950.5 |
|
995.7 |
|
Other financial assets (note 16) |
118.1 |
|
114.5 |
|
Prepaid expenses |
168.7 |
|
104.2 |
|
Income taxes receivable |
27.5 |
|
18.8 |
|
|
3,300.7 |
|
3,256.6 |
|
Non-current assets |
|
|
Right-of-use assets (note 17) |
894.3 |
|
913.4 |
|
Property and equipment (note 18) |
314.9 |
|
347.7 |
|
Intangible assets (note 19) |
275.5 |
|
355.4 |
|
Goodwill (note 20) |
3,731.9 |
|
3,568.8 |
|
Deferred income tax assets (note 12) |
169.2 |
|
145.8 |
|
Other assets (note 21) |
150.9 |
|
88.4 |
|
|
5,536.7 |
|
5,419.5 |
|
Total assets |
8,837.4 |
|
8,676.1 |
|
|
|
|
Liabilities |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities (note 22) |
1,718.2 |
|
1,650.7 |
|
Billings in excess of costs and anticipated profits (note 15) |
708.5 |
|
629.0 |
|
Income taxes payable |
119.1 |
|
125.3 |
|
Provisions (note 23) |
71.4 |
|
71.8 |
|
Dividends payable to shareholders (note 27) |
42.5 |
|
39.7 |
|
Current portion of lease liabilities (note 17) |
233.1 |
|
211.7 |
|
Current portion of long-term debt (note 24) |
296.9 |
|
307.8 |
|
|
3,189.7 |
|
3,036.0 |
|
Non-current liabilities |
|
|
Long-term debt (note 24) |
277.3 |
|
1,091.9 |
|
Lease liabilities (note 17) |
785.3 |
|
838.9 |
|
Provisions (note 23) |
180.9 |
|
72.8 |
|
Retirement benefit obligations (note 9) |
232.4 |
|
213.4 |
|
Deferred income tax liabilities (note 12) |
90.4 |
|
91.2 |
|
|
1,566.3 |
|
2,308.2 |
|
Total liabilities |
4,756.0 |
|
5,344.2 |
|
|
|
|
Equity |
|
|
Equity attributable to shareholders of WSP Global Inc. |
4,080.4 |
|
3,330.8 |
|
Non-controlling interests |
1.0 |
|
1.1 |
|
Total equity |
4,081.4 |
|
3,331.9 |
|
Total liabilities and equity |
8,837.4 |
|
8,676.1 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWSReferences
to notes refer to notes in the financial statements
|
Fourth quarters ended |
|
|
Years ended |
|
|
|
December 31,2020 |
|
|
December 31,2019 |
|
|
December 31,2020 |
|
|
December 31,2019 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Operating
activities |
|
|
|
|
Net earnings |
70.0 |
|
|
40.8 |
|
|
277.4 |
|
|
285.7 |
|
|
Adjustments (note 28) |
91.2 |
|
|
144.6 |
|
|
416.7 |
|
|
435.4 |
|
|
Net financing expense (note
11) |
1.9 |
|
|
28.4 |
|
|
73.5 |
|
|
102.0 |
|
|
Income tax expense (note
12) |
33.4 |
|
|
13.5 |
|
|
108.5 |
|
|
100.1 |
|
|
Income taxes paid |
(39.6 |
) |
|
(11.4 |
) |
|
(104.5 |
) |
|
(79.8 |
) |
|
Change
in non-cash working capital items (note 28) |
224.9 |
|
|
209.6 |
|
|
353.5 |
|
|
(29.1 |
) |
|
Cash inflows from operating activities |
381.8 |
|
|
425.5 |
|
|
1,125.1 |
|
|
814.3 |
|
|
Financing activities |
|
|
|
|
Net repayment of long-term
debt |
(338.5 |
) |
|
(95.5 |
) |
|
(857.1 |
) |
|
(96.6 |
) |
|
Lease payments |
(87.6 |
) |
|
(67.0 |
) |
|
(301.3 |
) |
|
(260.7 |
) |
|
Net financing expenses paid,
excluding interest on lease liabilities |
(9.0 |
) |
|
(21.9 |
) |
|
(49.8 |
) |
|
(69.0 |
) |
|
Dividends paid to shareholders
of WSP Global Inc. |
(19.7 |
) |
|
(19.3 |
) |
|
(88.3 |
) |
|
(77.6 |
) |
|
Dividends paid to a
non-controlling interest |
(0.2 |
) |
|
(0.5 |
) |
|
(0.6 |
) |
|
(6.2 |
) |
|
Issuance of common shares, net of issuance costs
(note 25) |
1.2 |
|
|
0.5 |
|
|
550.8 |
|
|
13.3 |
|
|
Cash outflows from financing activities |
(453.8 |
) |
|
(203.7 |
) |
|
(746.3 |
) |
|
(496.8 |
) |
|
Investing activities |
|
|
|
|
Net disbursements related to
business acquisitions |
(73.9 |
) |
|
(125.9 |
) |
|
(124.4 |
) |
|
(220.9 |
) |
|
Lease incentives received |
— |
|
|
25.3 |
|
|
— |
|
|
25.3 |
|
|
Additions to property and
equipment, excluding business acquisitions |
(21.6 |
) |
|
(65.9 |
) |
|
(72.1 |
) |
|
(122.4 |
) |
|
Additions to identifiable
intangible assets, excluding business acquisitions |
(9.1 |
) |
|
(10.9 |
) |
|
(21.0 |
) |
|
(26.6 |
) |
|
Dividends received from
associates |
9.1 |
|
|
10.8 |
|
|
19.4 |
|
|
10.8 |
|
|
Net proceeds from disposal of
businesses |
9.7 |
|
|
— |
|
|
8.2 |
|
|
— |
|
|
Proceeds from disposal of
property and equipment |
1.0 |
|
|
1.1 |
|
|
4.6 |
|
|
11.7 |
|
|
Proceeds from sale of
investments in associates and joint ventures |
(0.4 |
) |
|
(3.8 |
) |
|
— |
|
|
— |
|
|
Cash outflows from investing activities |
(85.2 |
) |
|
(169.3 |
) |
|
(185.3 |
) |
|
(322.1 |
) |
|
Effect of exchange rate change on cash and cash equivalents |
(0.3 |
) |
|
(3.2 |
) |
|
3.9 |
|
|
(12.0 |
) |
|
Change in net cash and cash equivalents |
(157.5 |
) |
|
49.3 |
|
|
197.4 |
|
|
(16.6 |
) |
|
Cash
and cash equivalents, net of bank overdraft – beginning of
year |
592.2 |
|
|
188.0 |
|
|
237.3 |
|
|
253.9 |
|
|
Cash and cash equivalents, net of bank overdraft - end of
the year (note 28) |
434.7 |
|
|
237.3 |
|
|
434.7 |
|
|
237.3 |
|
|
NON-IFRS MEASURES
The Corporation reports its financial results in
accordance with IFRS. However, in this press release, the following
non-IFRS measures are used by the Corporation: net revenues;
adjusted EBITDA; adjusted EBITDA margin; adjusted net earnings;
adjusted net earnings per share; backlog; free cash flow; days
sales outstanding (“DSO”) and net debt to adjusted EBITDA ratio.
Additional details for these non-IFRS measures, including a
reconciliation of such measures to the most directly comparable
IFRS measures, can be found in WSP’s MD&A for the year ended
December 31, 2020, which is posted on WSP’s website at
www.wsp.com, and filed on SEDAR at www.sedar.com.
Management believes that these non-IFRS measures
provide useful information to investors regarding the Corporation’s
financial condition and results of operations as they provide key
metrics of its performance. These non-IFRS measures are not
recognized under IFRS, do not have any standardized meanings
prescribed under IFRS and may differ from similar computations as
reported by other issuers, and accordingly may not be comparable.
These measures should not be viewed as a substitute for the related
financial information prepared in accordance with IFRS.
ABOUT WSP
As one of the world’s leading professional
services firms, WSP provides engineering and design services to
clients in the Transportation & Infrastructure, Property &
Buildings, Environment, Power & Energy, Resources and Industry
sectors, as well as offering strategic advisory services. WSP's
global experts include engineers, advisors, technicians,
scientists, architects, planners, environmental specialists and
surveyors, in addition to other design, program and construction
management professionals. Our talented people are well positioned
to deliver successful and sustainable projects, wherever clients
need us. wsp.com.
FORWARD-LOOKING STATEMENTS
Certain information regarding WSP contained
herein may constitute forward-looking statements. Forward-looking
statements may include estimates, plans, objectives, expectations,
opinions, forecasts, projections, guidance, outlook or other
statements that are not statements of fact, including statements
regarding the expected timing of completion of the Golder
Acquisition, the 2021 target range, the sufficiency of WSP’s
liquidity and working capital requirements for the foreseeable
future. Forward-looking statements made by the Corporation in this
press release are based on a number of assumptions believed by the
Corporation to be reasonable as at February 24, 2021,
including assumptions about general economic and political
conditions; the state of the global economy and the economies of
the regions in which the Corporation operates; the state of and
access to global and local capital and credit markets; the
anticipated impacts of the COVID-19 pandemic on the Corporation’s
businesses, operating results, cash flows and/or financial
condition, including the effect of measures implemented as a result
of the COVID-19 pandemic; the completion of the Golder Acquisition,
the expected timing of completion and benefits of the Golder
Acquisition, the expected synergies and certain expected financial
ratios to be realized as a result of the Golder Acquisition.
Although WSP believes that the expectations
reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been
correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause
actual results to differ materially from those anticipated or
implied in the forward-looking statements, including risks relating
to the COVID-19 pandemic. WSP's forward-looking statements are
expressly qualified in their entirety by this cautionary statement.
The complete version of the cautionary note regarding
forward-looking statements risk factors, which, if realized, could
cause the Corporation's actual results to differ materially from
those expressed or implied in forward-looking statements, are
included in WSP's Management’s Discussion and Analysis for the year
ended December 31, 2020, which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and WSP does not
assume any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise unless expressly required by applicable securities
laws.
FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
Alain MichaudChief Financial OfficerWSP Global
Inc.alain.michaud@wsp.com Phone: 438-843-7317
WSP Global (TSX:WSP)
Historical Stock Chart
From Aug 2024 to Sep 2024
WSP Global (TSX:WSP)
Historical Stock Chart
From Sep 2023 to Sep 2024